Friday, May 20, 2011

While Pittsburgh's median age dropped by more than two full years in a decade, the median age rose in Cincinnati, Cleveland and Minneapolis, among other comparably sized cities for which data were released.

Pennsylvania is showing its gray in Census figures being released Thursday, with the median age of residents having inched past 40 as the first baby boomers approach retirement age.

Counties in rural northern Pennsylvania, as well as areas in western parts of the state once teeming with steel mills and coal mines were among the oldest in the commonwealth, according to the statistics from the 2010 head count providing fresh evidence of a long-developing trend.

Also factoring in is the maturation of the massive baby boom generation, the oldest of whom turn 65 this year. Plus, the percentage of Pennsylvania homes with children dipped to 29.9, down from 32.6 percent in 2000.

The consequences are broad in Pennsylvania. While leaders try to reverse the "brain drain" of young, educated residents to warmer or more lucrative locales, state lawmakers mull balancing the needs of a population living longer while trying to cut into a massive budget deficit.

Pennsylvania is dying. Pittsburgh isn't. The Rust Belt is dying. Pittsburgh isn't. Yet the cries of "brain drain" and "shrinking city" persist. The numbers can't possibly be true. It's a trick, a quirk of rising student enrollments. The asterisk remains.

Wednesday, May 18, 2011

Maps are abstractions of place, not objective representations. For sake of practicality, a small area will be used to stereotype an entire region. The approach cuts both ways. Not all of Austin or Portland is weird. But the pockets of eccentric behavior come to define both cities. The information left off of the mental map is beneficial. For Rust Belt cities, the opposite is true:

The Detroit that natives love, share and thrive in is a story that had to be told. Our heritage is one of design and technical leadership and on this platform we hold our own on an international stage. This foundation, generated by the mighty auto industry, has laid the groundwork for world class art, culture, science and technology. Our infrastructure feeds innovation. From our diverse backgrounds and the multitude of cultures that make Detroit so dimensional comes a very unique rhythm … so many “pockets of cool.”

Our Pockets of Cool initiative uses video stories, called vidbits, to tell the story of the pockets of people and places that make Detroit unique and personalize how Detroiters see the city … with pride of place. These are the people that feed our passions with great style.

Specific neighborhoods tend to be the main attraction when twentysomethings make a relocation decision. To be sure, there are regional considerations such as economic vitality. More importantly, you want to be where the action is, where like-minded people live. Who's your neighborhood?

The mesofacts are working against Detroit. Popular geographic abstractions turn pockets of cool into fairy tales told by boosters desperate to fix a broken city. We've seen the ruin porn. We know Detroit. We won't move there.

Detroit has pockets that I think are cooler than anything you will find in either Austin or Portland. That doesn't mean Detroit > Portland. On the whole, Austin and Portland are a lot better off than Detroit. Also on the whole, that doesn't matter to twentysomethings. Detroit has the assets to attract young talent. Detroit has a competitive advantage:

One of the strategies to attract people to the region is to capitalize on the connections individuals may already have to Cleveland. Focusing attraction efforts on people who have lived in Cleveland at some point in time and encouraging them to return to the area is what “Boomerang” attraction is about. Usually when a “boomeranger” moves back, they bring people with them (family, friends, etc.). The purpose of this focus group is to learn about some of the issues that “boomerangers” face and discuss how to leverage existing connections to their families, friends and networks about the moving back to Cleveland for opportunities. We will want participants to discuss specific strategies on how to create and maintain these potential boomerang networks, to create outreach strategies, and to think about how we might implement these strategies.

The remarkable Rust Belt turnaround continues. As the Great Recession continues to ravage large swaths of the Sun Belt, the industrial dinosaurs of the North have emerged as lean and mean. The Cleveland upswing:

“The fundamentals of the region are better than people thought five or 10 years ago; we've finally reached bottom,” Mr. Waltermire said, embracing the notion that Cleveland appears to have shed the last of its dying industry and is following the same path of recovery as Pittsburgh.

There, the sweeping away of the steel industry in the 1980s has allowed new-economy businesses and the young workers attracted to those businesses to be the face of the Pittsburgh economy.

Mr. Waltermire used Akron as an example of the transformation he's seeing. There, total employment has grown over the last decade, the only metropolitan area in Ohio to see such growth, he said.

“Akron hasn't been the rubber capital for 10 years,” he said. “The diversification, while painful, is paying off.”

Whatever Rust Belt cities were doing, many observed it wasn't working. But regions don't turn on a dime. It's more like a supertanker changing direction. The course correction starts well advance.

Critics, cynics, and skeptics aren't patient enough. The typical time frame is one term in office for a politician. Whereas urban planners think in decades. When any city blossoms, those seeds were sown long ago.

Interestingly, Cleveland is beginning to embrace its journey by admiring its rival in Pittsburgh while touting the success of neighboring Akron. Life is elsewhere. Despite the size differences, Akron and Pittsburgh have a lot in common. Go ahead and lump Rochester, NY in with that group. These manufacturing centers are now more "college towns" than anything else. You can see that in the educational attainment rates.

Three important facts emerge that from the preceding discussion of what has happened in Akron and Rochester in the last twenty years. First, in both places, clusters of industry emerged around core technology at the end of the 19th century which grew and prospered in the 20th century. In both cases, a troika of major international firms emerged around these technologies. Second, by the 1980s, these companies had run into competitiveness issues related which stemmed, in part, to their apparent inability to innovate. Companies in both places took actions designed to address this concern including acquiring portfolio companies, building new research capabilities in different areas of technology and moving some innovation activities to places thought to be more cutting edge. Finally, community leaders in both places engaged in very similar interventions designed to use local universities as a base from which to engage companies in an effort to improve innovative capabilities in place.

I understand the Pittsburgh transformation in similar terms. To what extent has this occurred in Cleveland? I don't know the answer to that question. Like Detroit, Cleveland may have missed that window of opportunity. That doesn't mean all of Northeast Ohio can't benefit from Akron talent and innovation. Likewise, Youngstown can hitch its wagon to Pittsburgh's.

However, Cleveland's transformation already may be in the pipeline. Over the last two months, I've been looking at the city's talent migration profile and I see a variety of promising trends. There is no reason to panic about the 2010 Census. The supertanker is coming around.

The Rev. Jim Moos, pastor at Bismarck's United Church of Christ in Highland Acres, will preach his final sermon at the UCC this Sunday before leaving to assume a post with the national United Church of Christ in Cleveland.

Across town, the Rev. Maury Millican is preparing for his final Sunday May 29 at Bismarck Community Church on East Michigan Avenue before leaving for Fort Hood, Texas, to become a trainer of military chaplains.

Moos has been at his Bismarck congregation for 15 years; Millican for 14.

Moos, a native of Streeter, will head to Cleveland, with a metro area of about 2 million. The Rust Belt city is undergoing economic transformation and challenges, Moos said, but has some world-class arts groups, the famed Cleveland Clinic, and schools such as Case Western.

Moos will become the next executive minister of Wider Church Ministries of the UCC, which includes overseas missions, health advocacy, hunger, relief and development efforts and child sponsorship.

The Bismarck UCC supports relief and development work in East Timor in Asia and Moos has made several trips there since 2002 to visit projects.

The national UCC headquarters is right in Cleveland's downtown, Moos said, and that's where he and his wife, Sharon, hope to live.

I assume the ironic relocation stems from the address of the UCC headquarters. You go where you know. I'll make a leap and introduce an upside for investing in an urban convention center, a renewal project that I understand as a boondoggle.

The UCC does "relief and development work" all around the world. That connects all those places to Cleveland via the headquarters. If the relationship is strong enough, then a detailed sense of place can travel along the UCC network lines. Furthermore, I'd guess that a trip to Cleveland for various UCC VIPs is likely to occur at least once or twice.

I had a similar experience back in 2004, when the Association of American Geographers held its annual meeting in Philadelphia. That is, the conference was located downtown. To this day, I have a positive association with that region thanks to the overwhelmingly positive visit. I would be open to living there if such an opportunity would arise.

I'm still skeptical that conference business is a financial windfall for any city given the costs of building a new facility. However, showing off your downtown to someone who would otherwise never go there is priceless as far as migration is concerned. What about subsidizing a free and frequent shuttle service between the convention center and the commercial centers of some of your better established inner city neighborhoods?

So much for all the worrying about "brain drain" in Ohio. New estimates from the U.S. Census Bureau show that a bigger problem just might be "middle age drain."

Over the last decade, the loss of middle-age Ohioans outpaced the drop in the state's young workers.

According to census figures released early Thursday, there was an 18 percent decline among the number of Ohioans ages 35 to 44. That amounts to 325,000 fewer people.

To be fair, the 25 to 34 cohort dropped 7%. That's the target market for state effort designed to keep talent from leaving. Slice up that information any way you want. It adds up to a problem. But Ohio is losing almost three times as many people in the 35 to 44 cohort.

The crux of last week's post concerned return migration. When a member of the younger cohort exited the country, she stood a good chance of returning. That isn't the case with those people in a later life stage (i.e. more established in career and family).

Outward mobility – the number of British students taking places at international universities – has become an area for research at the Higher Education Funding Council for England (HEFCE), the British Council, within universities, and for the Government.

The Department for Business, Innovation and Skills, then under a different name, commissioned a study exploring the motivations and experiences of UK students studying abroad. The review involved 560 questionnaires completed by UK students living and studying in the USA, Ireland, Australia, France, Germany and the Czech Republic. The report suggests the notion of brain drain is ill-founded: 76 per cent of surveyed students planned to return.

Fiona Smith, lecturer and researcher at the Centre for Applied Population Research at Dundee, worked on the report.

“About half of those we surveyed were engaged in postgraduate study, and half were in undergraduate study,” she explains. “Interestingly, those with the highest qualifications were the most likely to intend to return to the UK, either after they completed their course, or after a short period of working abroad.” Smith adds that there was a distinction between those who were studying abroad in order to migrate – which happens a lot when it comes to studying in Australia – and those who wanted to access particular expertise to develop their career and their personal skills. “Returning to the UK, for them, was part of that plan,” she says.

Skeldon says it’s important to consider the reality of migration, too. “We can look at whether the students who study overseas intend to come back, but what they actually do is another thing,” he says. He cites his own experience: “I went overseas to study as a postgraduate, but ultimately I came back. Expatriates are a minority of any population, and circumstances change. You may have elderly parents you want to support, for example – so it’s not just controlled by economic factors.”

I won't get into the domestic benefits of expatriates who stay abroad. I want to focus on the best talent retention strategies. The sweet spot is 35-44, not 25-34. I'm not aware of any effort in the United States that exclusively panders to this cohort. But if you want votes or lucrative speaking engagements, you best talk young adults. It isn't about efficacy so much as it is feeding the goose that lays the golden egg.

The regional growth of the senior population greatly exceeded the rate of overall population growth, which was 24 percent. The Atlanta region also is graying considerably faster than the nation as a whole; nationally, the 65-and-older population grew by 13 percent from 2000 to 2009 (the latest census figure available, which is based on a population sample).

The Rust Belt is outsourcing its aging to the Sun Belt. The culprit is migration of the snowbird kind. Inexpensive and warmer Georgia is the attraction. The problem for Atlanta is how to serve this growing demographic cohort when so much of the city is geared towards younger generations. More pressing, how do you pay for it?

Legacy costs are beginning to mount in many metros throughout the Southeast. That's not to say that life is better in the colder and more expensive (tax-wise) Northeast. The playing field is more level and the greenfield advantage is eroding, quickly. The bloom is off the Cherokee rose.

"Once you hit bottom the only one way to go is up," said John Bair, 23, a photographer and filmmaker from Pittsburgh. "Everybody that I come in contact with seems to be on the upswing. I consider that a pretty good thing."

That anecdote qualifies as a mesofact moment. Attitude and perception are instrumental to any recovery. Anything is possible in Pittsburgh, including growth. The rose colored glasses suit the film industry. From Variety:

Tim Iacofano, a producer on Fox's "Locke & Key" pilot that filmed in Pittsburgh, says location selection is often driven by the best financial deal. "We only seriously looked at locations with tax incentives," he says, noting that "Locke & Key" is set in an old, haunted mansion. "Pittsburgh was chosen because the architecture we needed for this house was found there." ...

... Iacofano, a Cleveland native, says he's impressed by the Midwestern work ethic of crews when he's shot in Chicago and Pittsburgh. "The workforce in Pittsburgh is a very motivated group, which is not to say they aren't in Los Angeles, which has some very talented professionals who are also motivated. But when you work in a place like Pittsburgh and realize the future of the industry in your town is at stake, it's different," he says. "It's a little extra something."

Emphasis added. The word about the Pittsburgh scene is getting around. Outsiders are moving in. It's a cool place to be:

Jeremiah Clark was weaned on sad contemporary Christian songs. But now that's he secular? ''[A sad song] doesn't have to be Jesus on a cross anymore,'' he laughs.

Clark was only 16 when he started writing songs in his bedroom. Last year, after years spent in more traditional employment, Clark, now 26, committed to becoming a full-time musician, a move spurred on by touring in support of D.C.'s popular gay rocker Tom Goss. This Saturday, May 14, Clark stops by Black Fox Lounge on Connecticut Avenue for a show to promote his self-released debut album, Just Another Sad Song.

Clark turned away from becoming a contemporary Christian musician soon after graduating from his Memphis-area high school. ''My beliefs changed a lot when I accepted who I was, as a homosexual,'' he says. ''I became much more spiritual. I found faith in the people around me more so than any holy text.''

Now a practicing Taoist living in Pittsburgh, Clark grew up the youngest of two boys in a family nominally Southern Baptist. ''My parents have accepted me for who I am, they embrace that,'' he says. ''I'm very thankful."

I'm interested to know how Clark ended up in Pittsburgh. Even if there is a native connection, he hasn't bolted for New York or some other big city with a better community of musicians. Like any other boomtown, Pittsburgh will transform into a destination for talent before anyone notices. That moment has come to pass. "Steel City" oozes irony.

Wednesday, May 11, 2011

Perversely, Cleveland is trying to be more like Pittsburgh. I suppose such a development is better than the zero-sum thinking that usually dominates the regional rivalry. Via the Null Space Twitter machine, Federal Reserve Bank of Cleveland president Sandra Pianalto spells out what is wrong with Ohio:

“We don’t have world-class universities in Ohio,” she said, adding Ohio State University, Case Western Reserve University and the University of Cincinnati are all “moving up” as research institutions, but haven’t yet matched the contribution that Carnegie Mellon University provides Pittsburgh.

Place envy is the wrong way to frame a conversation about economic development. I suggest looking at what Pittsburgh doesn't do well and, at least as far as Cleveland is concerned, figure out how to compliment your neighbor instead of coveting his assets. Pittsblog to the rescue:

Pittsburgh is an amazingly innovative place. There is no shortage of innovation here, no shortage of ideas, and no shortage of innovators. What Pittsburgh needs more of is the will to move innovation *quickly* into the commercialization pipeline.

What if Cleveland focused on commercializing Pittsburgh innovations instead of investing in CMU Lake Erie? Part of Pittsburgh is already in Ohio. Parts of the state can and do leverage the close proximity of Pittsburgh and its universities.

It was a new experience for Lorain resident, Elsie Kral, too. She lives just 20 miles from Cleveland Hopkins Airport, but drove across the state line 120 miles to Pittsburgh's airport for her trip to Vermont. She saved $300. Kral said it was worth it even with her time, gas and tolls. ...

... The trip to Vegas in August may be cheaper out of Pittsburgh, but it connects in Cleveland.

"It's crazy isn't it?" Kral remarked.

Kral isn't going to Vegas, but a connection in Cleveland saved the Northeast Ohio woman money too. To save $300, Kral drove from Lorain to Pittsburgh. Then, she flew to Cleveland and then to Vermont.

"It doesn't make any sense at all," Kral said.

At least Cleveland didn't lose its hub like Pittsburgh did. Parochial pride is a killer. Cleveland should take advantage of the shortsightedness in the Pittsburgh market. The commercialization pipeline for CMU innovation needn't be in Silicon Valley or Boston. One could build it in Cleveland and both cities would be the better for it.

Three competing models evolved in the original colonies, [author Susan F. Martin] writes, each with a different vision of what purposes newcomers would serve. Elements of each have persisted since.

Virginia sought workers but found them in slaves.

Massachusetts sought believers but punished dissent.

Pennsylvania sought citizens, and built them from foreign stock (despite gripes from residents as cosmopolitan as Benjamin Franklin).

You won't find anyone espousing constitutional orthodoxy (a literal reading not unlike some Protestant interpretations of the Bible) clamoring for a decentralization of border control. That's because these self-taught historians know little about state building and too much about nationalist mythology. Guarding the country's frontier, in terms of immigration, was not part of the original contract.

How we understand the border today is the product of about 150 years of Supreme Court debate about the relationship between executive power and sovereign territory. Both immigration and citizenship law are ever-changing. That is to say, getting back to the roots of the Constitution would mean Pennsylvania regulating the movement of foreign nationals as it sees fit.

During the era of the modern nation-state, such considerations were impractical. The freedom of movement between the individual states would impose the most liberal regime on the entire country. That's not necessarily the case today, as recent anti-immigrant legislation in Arizona suggests.

I think we should embrace the anti-federalist mood swing. Allow states such as Pennsylvania to embrace talent immigration as each sees fit. Better yet, let cities decide. H-1B visas effectively tie foreign born labor to the employer through sponsorship. Municipalities could act in the same capacity, making the visa contingent on urban residence and site of work. Various schemes could be concocted to enhance geographic mobility. Green cards would issued after a few years, well before the end of the federal queue.

The federal government would still play a role. In order to be eligible for this program, you must matriculate at a US college or university and graduate from one of those institutions. The student visa rules remain as they are. That way, immigrants elect to enter the system and pass muster with whatever litmus test the United States deems necessary.

Where a drab low-income housing project now sits, leaders of the University at Buffalo, part of the State University of New York system, envision glass-and-steel biomedical buildings. They propose hiring hundreds of new professors and thousands of staff members. They imagine young researchers living in restored lofts, dining at street-side bistros and walking to work.

I have mixed feelings about the plan. As an economic development strategy, I like it. Demographically, I worry that Buffalo is fighting against the current.

The latter concern is more worthy of a blog post. There are only so many students to go around. Recruiters are scavenging the world for anyone willing to fill a seat. With slashing budgets, tuition revenue is of growing importance.

Rust Belt regions do a great job of educating a local workforce. But that pool of high school graduates is shrinking or barely growing. Over the last few years, orientation of marketing has shifted to out-of-state. Beggar-thy-neighbor is the usual gambit. Ohio's gain is Pennsylvania's loss (e.g. Youngstown State).

I recommend a bolder approach. Go after the children of the foreign born who reside in the gateway cities outside of the Rust Belt. Cut those kids, second generation immigrants, a tuition deal. You don't have to tangle with the Department of Justice. You still have a vital link to the homeland abroad.

Proximity (state next door) is the low-hanging fruit. It's also a zero sum game. "Midnight's Children" represent a connection to a huge number of ambitious students. They are an army of globalization. What's the UB 2020 plan for attracting talent?

Friday, May 06, 2011

Aside from Las Vegas, a fantasy island built on gambling and tourism, I'm unaware of any U.S. city that has built a casino for any reason other than desperation. Failing Rust Belt cities build casinos. Detroit and Pittsburgh have them. Cleveland and Cincinnati are joining the list. Saginaw and Lansing, Mich., and Rockford, Ill., want to build them.

Is that who we are? Or is this an entirely different case?

From my vantage point, we are a city and a state that falls somewhere between the failed Rust Belt and the ascendant West. We are not strapped to a gurney like Cleveland or Detroit, waiting for a transfusion. But neither are we as dynamic or appealing as Seattle or Denver or Austin. If not a transfusion, downtown could use a vitamin pill.

Yes, Minneapolis is weighing the casino Hail Mary. No, it isn't a failing city. What qualifies as a failing city? Is Cleveland really "strapped to a gurney"?

The casino litmus test is strange. Typically, the issue is crushing legacy costs, not downtown vitality. More than just Rust Belt cities are in serious fiscal trouble. Funding public pensions is a national crisis. Pushing for legalized gambling doesn't make Colorado (home to "dynamic or appealing Denver") a failing state.

I know that downtown's retail scene is a faint shadow of its former self and that its share of the metro office market has been slipping. I know that the Convention Center and Target Center could be doing better, and that Block E's big flop has been a disappointment to the rest of the entertainment district.

There's more and it makes urban core Pittsburgh seem better by comparison. The casino wasn't an electric shock for a dead downtown. The city needs revenue.

All Rust Belt cities are failing or dying. That's the dominant narrative for this megaregion. That's why no one from outside this part of the United States will move there. Perception matters, a lot, to migration.

Rod Backman, the chairman of a state census committee and a former North Dakota budget director, said he wasn't surprised by the numbers.

"At least traditionally, North Dakota has aged faster than states like Arizona or Colorado, which get a lot of migration into them," Backman said. "But the more recent migration from the oil industry should help with that."

An oil boom in western North Dakota has attracted an influx of young workers, and Backman said the census did not count all of them as North Dakota residents.

Between the census cutoff date of April 1, 2010, and March 1, 2011, at least 665 new oil wells were drilled in North Dakota, according to the state Department of Mineral Resources.

But oil booms can end and transient field workers may not stay in the state afterward. Govig said he's focused on building more stable industries, such as manufacturing, by offering tax breaks and other financial incentives.

"We're very thankful for what's going on in the northwest, and those jobs are tremendous, but we have to look at a wider picture than that," Govig said.

Two years ago, at the Legislature's request, the Commerce Department set up the North Dakota Youth Office to encourage young workers to stay in the state. This weekend, it will host a job fair in Minneapolis where North Dakota businesses can recruit entry-level employees.

The workforce is aging and massive attrition looms. Clearly the initiative designed to keep young workers was insufficient (I doubt it was effective). States have to go out and recruit, attract people to move there.

I'll put the issue in different terms, metrics of success. Assessing the cost-benefit of the North Dakota Youth Office is almost impossible. However, programs designed to attract talent are easy to measure. How many wins were generated from that job fair in Minneapolis? Businesses can tell you. But no one knows if someone would have stayed even if no one encouraged them to do so.

William L. Fox, a writer and the director of the Center for Art + Environment in Reno, said he believed that these kinds of wildly interdisciplinary art-making and academic activities might be flourishing in the West because artists see it as a place where boundaries are less rigid, and they can go looking for insights from many fields of knowledge, the way hard sciences have long done.

“For me, art is about making metaphors, and to do that you feed on new sources of information,” said Mr. Fox, who has served as a field lecturer for the Lubbock program. “In a sense that’s all artists are doing, the same as scientists: ‘What areas can we poke our noses into that give us new information and show us how to make work in a way we’ve never thought of?’ ”

Emphasis added, the West as frontier. One could say the same about Rust Belt cities. That's the metaphor informing the Levi's Braddock ad campaign. Walt Whitman and Ansel Adams sit around an urban campfire with John Fetterman and Phil Kidd. Vacant steel towns are places of possibility, where we can see the world in a new light.

We shouldn't label artist as Rust Belt saviors, residents of forsaken neighborhoods. They are urbanists, writers of policy. They are geographers and urban planners.

My hope is that these academic programs thriving in the West will migrate to the Rust Belt. We don't need a creative economy so much as we need to rethink shrinking cities. That's where the artists come in ...

Tuesday, May 03, 2011

I figure that regions and states spend at least $1 billion per year to combat brain drain. It's a colossal waste. Worse, we tend to focus our efforts on retaining young adults who are the most geographically mobile. The strategy is wildly popular and, truth be told, dumb. Some clarity on the matter from Australia:

Australia doesn't have a problem with brain drain. While 35 per cent of skilled emigrants go to Britain and Ireland, and the US and New Zealand attract 10 per cent each, a new report on the net gains from international skilled movement found that most are under 30 and leave to see the world.

The report by Monash University's Bob Birrell, Virginia Rapson and T. Fred Smith for the Immigration Department did find those aged 30 to 44 were likelier to stay abroad for a relatively long period.

Actual migration research touting counter-intuitive results is the status quo for talent policy. Unfortunately, we rarely adjust our sights in light of the new information. We plow ahead and try the same approach. It's easy money for an organization positioning itself as an expert on Millennials and what they want.

Millennials want to travel and see new places. Millennials don't want to stay in their hometowns, no matter how cool everyone else thinks it is. As the report indicates, we should be more concerned about the exodus of talent aged 30 to 44. Let the graduates sow their wild oats. Many of them will come back. But a mid-career professional with a family? You'll likely never see her again.

I've advocated for the attraction of the 30-44 cohort. They are likely to stick around once you get them there. Good luck retaining a recent college graduate who moved to your city. You might call them place sluts. Hipsters are particularly salacious, following the scene wherever it might pop up. The good news is that they pave the way for thirtysomethings, who price out all the twentysomethings your town spent so much money trying to retain.

Monday, May 02, 2011

A well-educated and flexible workforce should attract business. That's the theory. I've encountered plenty of evidence that the quality of the talent pool weighs heavily on firm relocation decisions. However, that tale of the tape isn't turning the "art of economic development" on its head. The regional job count is the metric that matters. Governing surfing the bow wave of the "1099 job" trend:

What happens when there really is no such thing as a "job" anymore? How do you practice the art of economic development?

The answer is that even though there may not be jobs in the conventional sense, there is still work. That's the whole idea of the 1099 economy. It's just a different way of organizing the economy. Businesses need economically valuable work to be done, but instead of employing people full-time and permanently, they contract with individuals to do the work temporarily. The work ebbs and flows, the businesses come and go, and the 1099 employees work for a while and then move on. It’s a lot more fluid -- and seemingly uncertain -- than the traditional economy.

What this means is that economic development efforts become much less about individual businesses and much more about the underlying infrastructure -- the dynamic flow of business growth entrepreneurs, financiers, public infrastructure) as well as the labor force (skill levels and the density of the labor supply). The "ecosystem" of economic growth becomes more important because a fluid economy requires this system to be operating at all times -- and most of it is in the community or the region, far beyond the factory gates.

To summarize, development is more about people than places. How can infrastructure help to better develop talent? Think in terms of growing 1099 workers instead of increasing the number of jobs.

The Governing article poses a few rhetorical questions that I think Rust Belt cities such as Pittsburgh should try to answer:

Having watched both her parents work in the 1099 economy throughout most of her childhood, my daughter isn’t particularly afraid of 1099 jobs. But she, like everybody else in the so-called Millennial generation, is a little uncertain about where this will lead. How stable is 1099 work? Will she ever have a full-time job? What will she do about medical insurance once she turns 26 and is no longer eligible to be on my policy?

Cities, and I mean the urban core, could offer medical insurance to residents who toil in freelancing. The carrot could be used to entice people to live in certain neighborhoods in need of revitalization. That's where you build the 1099 economic infrastructure. This will unleash geographic arbitrage because a lot of the work can and will be done via telecommuting.

I think city life dovetails well with the 1099 economy. Cheap rent lends itself to valuable third spaces and a concentration of other services that would benefit from the scaling that density provides. The knowledge spillover potential is the icing on the cake. Oh yeah, and food trucks. Lots of food trucks peddling Rust Belt Chic cuisine.

There were other inspirational improvements this year. Sparked by a revival in manufacturing, a host of former sad sacks in parts of the Midwest are showing signs of definite improvement. Niles-Benton Harbor, Mich., a long-time denizen at the bottom of our list, shot up a remarkable 242 places this year to a respectable No. 121. Another old industrial city, Kokomo, Ind., ascended 177 places to No. 215, while Holland-Grand Haven, Mich. improved by 172 places to No. 221 and Grand Rapids, Mich., rose 167 places to No. 183. Milwaukee, a long-time loser among our largest metros, moved up by a healthy 163 places overall to a better-than-average No. 143.

The Northeast Corridor has also made strong progress. Here the likely explanation can be found in the fruits of Obamanomics. The stimulus has been particularly good for the vibrant economies surrounding the ever-expanding federal leviathan. Among the large metros, Washington-Arlington-Alexandria, Va., did best of all the cities outside the South, repeating its No. 6 ranking among large metro areas. Right behind, at No. 7 on the large city list, sits the primarily suburban Northern Virginia metro area, while Bethesda-Rockville-Frederick, Md., ranks 12th.

The other big East Coast winners are the financial and university-oriented economies, which have reaped huge benefits from the TARP bailout and the Obama Administration’s college-centric stimulus plan. After the Texas cities and the imperial center, most of the best performing big metros are located in financial and university centers, including No. 9 New York City, No. 10 Philadelphia, No. 11 Pittsburgh, No. 13 Boston and No. 15 Raleigh-Cary, N.C.

There's Pittsburgh, on the verge of cracking the top 10 (moving up two slots from 2010). Joel Kotkin's rationale for the growth is, to be kind, a stretch. After all, the population is still in decline. How else to account for the Pittsburgh paradox?

Whatever the cause, Pittsburgh isn't muddling out of this recession. I'm at a loss to anticipate how the trend might change, at least in relative terms to the national economy. What shoe could drop? Unlike Kotkin, I see sound fundamentals informing the strengthening position.

Sunday, May 01, 2011

That legacy also includes a skilled workforce. Tom Waltermire of Team NEO, which attracts investment into the Cleveland area in Ohio, says: “The tremendous wealth generated during the 100-year heyday of manufacturing in this area – roughly from the 1870s to the 1970s – has created an infrastructure, including universities, that gives us the capability to conduct business and train people.”

For modern manufacturing companies which often require a smaller but highly skilled workforce, that can be particularly important.

Educational attainment, in terms of rates of graduation from high school and college, are generally higher in the northern states that have been adding industrial jobs than in the southern states that have been losing them.

The legacy cuts both ways. The costs of building the workforce infrastructure weighs heavily on the former industrial powerhouses. Still, the Sun Belt with its greenfields and right-to-work legislation can't compete in terms of organic talent production. Companies there are dependent on migration. Savings in labor costs don't justify the risk.

The data are, however, a corrective to the common perception that US manufacturing is inexorably moving away from northern states that have higher costs and stronger trade unions towards southern states, where the workforce tends to be lower-cost and less unionised.

The states that have continued to lose manufacturing jobs in the past year are led by New York, New Jersey and Maryland in the north and east of the US, but also include Mississippi, Nevada, Arkansas and Florida in the south.

Industry executives say the advantages of northern states, such as established infrastructure and often superior levels of educational attainment can be enough to outweigh the higher labour costs, particularly for high-tech manufacturing.

The disparity between the two regions is not unlike the rest of the world trying to catch up to US higher education. Great strides are being made, but America is still way ahead of the pack. We focus on the eroding prowess instead of the still significant competitive advantage. The Rust Belt leading the recovery isn't as ironic as you think.

According to statistics compiled by the Federal Housing Finance Agency, only three of the nation's 51 metro areas with a population of at least 1 million made it through the past 15 years without a single year of falling home values.

The three were Oklahoma City, Pittsburgh and Rochester.

That's 3 out of 51, or 6% of all metros tracked. I'd say that's statistically significant. But does it matter?

If someone asked me to predict a few unexpected boomtowns to emerge over the next few years, then I'd reply with this trio. But don't expect them to bubble up like the cities of the Foreclosure Belt. What was once considered to be modest growth is this era's ceiling.